I. Because Section 101 is not “specified” as a “condition for patentability,” and, further, is not a condition for patentability, a “violation” of Section 101 may not be raised in a covered business method proceeding.

The starting point of my analysis is a consideration of the statutory limitation on grounds that can be raised in a CBM proceeding. As part of a limited transitional program, Congress expressly and plainly limited the grounds that can be asserted in a CBM proceeding to a small subset of those than those that can be raised in patent infringement suits. Specifically, although 35 U.S.C. § 282 lists defenses in patent suits, under the AIA in CBM proceedings only the defenses listed in subsections (b)(2) and (b)(3) can be raised. 37 C.F.R. § 42.304. It is clear that subsection (b)(3) does not cover Section 101, since it cites only to sections 112 and 251.

As a consequence, the only potential basis for Section 101 to be a defense – and therefore a proper basis for CBM Review – is if it is within subsection (b)(2), which states: “(2) Invalidity of the patent or any claim in suit on any ground specified in part II [of Title 35] as a condition for patentability.” 35 U.S.C. § 282(b)(2).

Unless Section 101 is “specified” in “part II” as a “condition for patentability,” it is not a proper basis for instituting a CBM proceeding. Sections 100 to 212 are in part II of the Patent Act. Thus, Section 101 is in part II. However, of those one hundred and twelve separate sections, two are “specified” as “conditions for patentability” – sections 102 and 103. Their titles state:

102. Conditions for patentability; novelty.

103. Conditions for patentability; non-obviousness subject matter.

Thus, plainly sections 102 and 103 each is “specified” as a “condition for patentability.” Just as plainly, Section 101 is not “specified” as a “condition for patentability:”

101. Inventions patentable.

In my opinion, the words “specified” as “a condition for patentability” in subsection 282(b)(2) point to only two sections of the one hundred and twelve sections in part two: sections 102 and 103. Congress knew how to specify a condition for patentability by putting the words “condition for patentability” in the title: Section 101 is not specified as a condition for patentability. Any other reading of subsection 282(b)(2) renders the word “specified” superfluous, and it also renders the phrase “conditions for patentability” superfluous. Either result violates a basic tenet of statutory interpretation. Just as it is improper to read “in part II” out, it is improper to read these other express limitations out of the statute.

Even putting aside the fact that only two statutes in part II are specified as “conditions for patentability,” and assuming courts are free to allow defenses to be raised under subsection 282(b)(2) even though they are not specified as “conditions for patentability,” it is clear that, in substance, Section 101 is not a “condition.”

First, reading the statute as a whole (which proper analysis requires), there is no doubt that Congress knew how to write a “condition for patentability.” In substance, sections 102 and 103 are express conditions for patentability. Section 102 begins, “A person shall be entitled to a patent unless . . . .” Section 103 states that “a patent for an invention may not be obtained . . . if the differences” would have been obvious at the time of the invention. Section 102 conditions patentability on novelty; section 103 conditions patentability on non-obviousness.

In stark contrast, Section 101 permissively states that “[w]hoever invents or discovers any new and useful process . . . or any new and useful improvement thereof, may obtain a patent therefor,” but doing so is “subject to the conditions and requirements of this title.” Thus, Section 101 grants permission to an inventor to apply for a patent, subjecting issuance to the conditions and requirements of the title. Further, Section 101 does not limit the person’s entitlement to a patent, unlike Section 102 and 103. It is in my opinion that Section 101 does not “condition” patentability on the invention falling within Section 101: if Congress had wanted to condition patentability on Section 101, it perhaps could have done so, but it plainly did not.

Further, the same legislation that codified the transitional CBM proceeding expressly describes Section 101, not as providing a condition for patentability, but as merely setting forth “categories of patent-eligible subject matter.” AIA § 18(e). Consistent with this, Congress authorized the PTO to rely on certain prior art to invalidate a claim under sections 102 and 103, AIA § 18(c), but the statute never mentions Section 101 as a basis for invalidity.

For these reasons, it is in my opinion clear that, although it is in part II of the Patent Act, Section 101 is not specified as a “condition for patentability” and it is in substance not a condition. Consequently, it is not a ground for review in the CBM proceeding sought by defendant herein.

In my opinion, the clarity of the text ends the inquiry. The text of the statute is not ambiguous. Nor is it absurd to conclude that Congress chose not to make “ineligible subject matter” a basis for CBM: indeed, given the Congressional purpose of speedy review of covered business method patents, a Section 101 inquiry would bog down the PTO in the myriad factual issues underlying the inquiry – many of which involve facts external to the PTO, such as whether the patent “preempts” other methods (i.e., whether there are non-infringing alternatives), what was “routine” or “conventional” in the art, and other facts not likely to be shown entirely by prior art. Omitting Section 101 is far from absurd but instead matches the purpose and intent of Congress to create a speedy, certain proceeding. See generally, Ultramercial, LLC v. Hulu, LLC, 772 F.3d 1335 (Fed. Cir. 2013) (identifying some of the factual inquiries inherent in the question of eligible subject matter).

Even assuming, nonetheless, that it is proper to look beyond the text, in my opinion it is proper to look to the purpose of the statute and legislative intent. Both confirm the plain meaning of the statute.

The purpose of the statute confirms that the CBM procedure was adopted to address shortcomings with the PTO’s ability in the late 1990’s to find prior art, and that was Congress’s intent. The House report makes clear that the purpose was to deal with the perception that in the late 1990’s, the PTO had not found the best prior art to apply under sections 102 and 103:

A number of patent observers believe the issuance of poor business-method patents during the late 1990’s through the early 2000’s led to the patent ‘‘troll’’ lawsuits that compelled the Committee to launch the patent reform project 6 years ago. At the time, the USPTO lacked a sufficient number of examiners with expertise in the relevant art area. Compounding this problem, there was a dearth of available prior art to assist examiners as they reviewed business method applications. Critics also note that most countries do not grant patents for business methods.

The Act responds to the problem by creating a transitional program 1 year after enactment of the bill to implement a provisional post-grant proceeding for review of the validity of any business method patent. In contrast to the era of the late 1990’s-early 2000’s, examiners will review the best prior art available….

H. Rep. 112-98, at p. 54 (June 1, 2011) (emphases added). Thus, the committee report[1] shows that the purpose of the amendments is consistent with the text: to allow those charged within infringement to show that the invention was not new or would have been obvious in light of “the best prior art available.” The report emphasized the lack of “a sufficient number of examiners with expertise in the relevant art area.” Nothing in the House report mentions the failure to recognize “abstract ideas” or the failure to properly apply Section 101. Further, it is absurd to suggest that in the late 1990s lack of access to prior art or lack of sufficient examiners with familiarity with prior art had any impact on the ability to determine what is a “law of nature,” or “abstract idea,” or the like. If anything, this shows that Congress enacted the CBM proceeding for the purpose of responding to the problem of difficulty in finding prior art and experts in the fields of business methods.

Beyond this, the legislative history of the AIA on this transitional program is, like almost all legislative histories, murky. I have reviewed the remarks made on the Floor of the Senate, and there is no doubt that a few members of Congress mentioned business method patents. A fair reading is that at least some members of Congress thought the source of the problem to be addressed was with “abstract” patents, while others believed the failure to consider the most pertinent prior art was the source of the problem. What controls is the language Congress enacted, not my speculation about the intent of a handful of elected representatives.

For the reasons shown above, in my view the text and committee report focus on prior art under sections 102 and 103. As enacted, in my opinion the AIA does not allow review of covered business methods for “eligible subject matter” in terms of Section 101.[2]

II. Arguments I Considered but Found Incorrect.

I understand the PTO’s position is that Section 101 can be a basis for instituting a CBM Review. E.g., SAP Am., Inc. v. Versata Dev. Group, Inc., CBM2012-00001 (Jan. 9, 2013).Director Kappos justified the PTO’s position, not by focusing on the text, but by stating: “This interpretation is consistent with both the relevant case law and the legislative history.”[3] The PTO in its decision in Versata relied upon the same grounds. For the following reasons, this interpretation is incorrect.

First, these authorities simply do not address the text of the statute. The statute is not ambiguous. It is not absurd. There is no reason whatsoever to move beyond the plain text.

Second, the Supreme Court case relied upon to support these views is Graham v. John Deere Co., 383 U.S. 1 (1966). That famous case about Section 103 had nothing to do with whether “eligible subject matter” was a condition for patentability, and did not decide that issue. Instead, in dicta analyzing the “condition for patentability” in Section 103, the court noted:

The Act sets out the conditions of patentability in three sections. An analysis of the structure of these three sections indicates that patentability is dependent upon three explicit conditions: novelty and utility as articulated and defined in § 101 and § 102, and nonobviousness, the new statutory formulation, as set out in § 103. The first two sections, which trace closely the 1874 codification, express the ‘new and useful’ tests which have always existed in the statutory scheme and, for our purposes here, need no clarification. The pivotal section around which the present controversy centers is § 103 . . . .

383 U.S. at 12-13. The statement actually undermines the argument that “eligible subject matter” is a condition for patentability. Graham explains that the Patent Act of 1793 had only two conditions for patentability: utility and novelty (both of which were once in the same statute, a precursor to sections 101 and 102). Id. at 10 (“Although the Patent Act was amended, revised or codified some 50 times between 1790 and 1950, Congress steered clear of a statutory set of requirements other than the bare novelty and utility tests reformulated in Jefferson’s draft of the 1793 Patent Act”). The Graham Court recognized that in 1952 Congress had added a third condition, non-obviousness. See id. at 14 (“Patentability is to depend, in addition to novelty and utility, upon the ‘non-obvious’ nature of the ‘subject matter sought to be patented’ to a person having ordinary skill in the art.’”) (quoting Section 103).

For these reasons, even if Graham is misapprehended as a definitive interpretation of Section 101, the Court’s opinion suggests that “eligible subject matter” is not a condition for patentability. If Graham stated that utility, novelty, and non-obviousness were conditions for patentability, then the Court’s statement that there are “three conditions”[4] means “eligible subject matter” is not one: if “eligible subject matter” were also a condition for patentability, then there would be four, not three, conditions.

I have also seen others avoid the text but instead cite to dicta in Dealertrack, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012) and to dicta in a footnote in Aristrocrat Techs., Austl. PTY LTd. v. Int’l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008). Neither case decided whether Section 101 was a condition for patentability. Although the merits of a Section 101 issue was decided in Dealertrack, the patentee did not contend that Section 101 was not a statutory defense, and the court did not decide that issue. Further, dicta in both cases traces directly back to the dicta from Graham. But loose language can be found in other cases saying exactly the opposite. For example, the Federal Circuit has stated: “The two sections of part II that Congress has denominated ‘conditions of patentability’ are § 102 . . . and § 103 . . . .” Myspace, Inc. v. GraphOn Corp., 672 F.3d 1250, 1260-61 (Fed. Cir. 2012). The Supreme Court made essentially the same observation in Diamond v. Diehr, 450 U.S. 175, 190-91 (1981).

The important fact to me is that none of these casesparse the statutory text, or just examine the purpose and legislative history of the AIA discussed here. Ignoring the actual text in favor of what courts have said a statute says is obviously incorrect. In that regard, the Supreme Court has overridden judicial interpretations of statutes that failed to adhere to the text, and has done so even after decades of having lower courts adhere to those incorrect constructions. See Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 177 & 191 (1994) (overruling six decades of case law implying a cause of action), superseded on other grounds by 15 U.S.C. § 78(t)(e). Whatever a court says a statute says, the Constitution makes paramount what the enacted text actually says.

I have also considered whether this analysis improperly relies upon titles to interpret the text. I agree it is generally improper to use the title to interpret text, at least where the title contradicts or is inconsistent with the substantive text. But that principle has no application here: Congress in the text of subsection 282(b)(2) limited the grounds upon which a CBM proceeding may be based to those “specified” in “part II” as “conditions for patentability.” Thus, the statutory text of Section 282 says to look for things “specified” in “part II” as “conditions for patentability.” Consequently, I am not using the title of any statute to interpret the meaning of Section 101: I am applying the plain text of subsection 282(b)(2). I am not using the title to interpret the text with respect to either “specified” as a “condition for patentability” just as I am not with respect to the statute’s use of “specified” in “part II.” Further, as shown above, I use only the text of the statutes to conclude that Sections 102 and 103 are conditions, but Section 101 is not. Reading those three statutes in pari materia (together), it is clear sections 102 and 103 are conditions, but Section 101 is not. The titles confirm the interpretation of the text, but they are not the source of it.

I have also considered other aspects of the legislative history. For example, then-Director Kappos observed: “a key House Committee Report states that ‘the post-grant review proceeding permits a challenge on any ground related to invalidity under section 282.’ H.R. Rep. No.112-98, at 47 (2011).”[5] Yet, it is undeniable that the text of the adopted statute points to only two subsections of Section 282, and so this sentence from that report flatly contradicts the enacted statute. A sentence in a committee report that directly contradicts the plain language does not control. As with most bills, the legislative history of the AIA contains many statements that are not the law, and a few that contradict the statute.

Others have pointed to this statement from a senator from Arizona, Senator Kyl: “section 101 invention issues” were among those “that can be raised in post-grant review.” 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011). Relying on this statement for the proposition that eligible subject matter is covered by the text is doubly problematic. Foremost, “section 101 invention issues” is not in the enacted text. Further, the Supreme Court has long and repeatedly rejected relying upon one legislator’s statement as having been presented to Congress and enacted into federal law. Doing so jeopardizes the Constitutional requirements of enactment and presentment. This is especially true where, as here, that statement contradicts the plain text as well as other more weighty evidence of legislative intent, coming in the form of Senate reports from the AIA, Congressional reports on the 1952 Act, and Federico’s commentary, discussed above. Those sources – which, if entitled to any weight, are entitled to more weight than one Senator’s floor statement – contradict Senator Kyl’s subjective interpretation of the statute. Again, however, I believe none of this matters here.

To sum up, in my opinion dicta in cases does not control. Dicta in cases that do not analyze the statutory text do not control. A committee report that flatly contradicts the enacted text does not control. And one Senator’s opinion is not enacted statutory text.

[1] The Supreme Court has cautioned against giving weight even to committee reports, admonishing courts that “judicial reliance on legislative materials like committee reports, which are not themselves subject to the requirements of Article I [of the U.S. Constitution], may give unrepresentative committee members – or, worse yet, unelected staffers and lobbyists – both the power and the incentive to attempt strategic manipulations of legislative history to secure results they were unable to achieve through the statutory text.” ExxonMobil Corp. v. Allapattah Serv., Inc., 545 U.S. 546, 568 (2005). Here, the committee report simply confirms the plain text; it is not being used to interpret the text.

[2] As explained above, courts view legislative history, particularly more modern legislative history such that accompanying the AIA, with skepticism. Thus, I only note that the Senate report from 1952 and persuasive commentary by P.J. Federico confirm the plain meaning. First, both reports from 1952 Act state: “Section 101 sets forth the subject matter that can be patented, ‘subject to the conditions and requirements of this title.’ The conditions under which a patent may be obtained follow, and section 102 covers the conditions relating to novelty.” H. Rep. 1923, S. Rep. 1979 (82d Cong. 2d Session) (emphasis added). It is a perversion of the English language to read “the conditions under which a patent may be obtained follow” Section 101, but nonetheless in Section 101. Second and consistent with the plain text and these reports, Federico wrote that Section 4886 – which Congress in 1952 split up into what became sections 101, 102, and (in a sense at least) 103 – had “specified the subject matter for which a patent could be obtained and recited conditions for patentability. In the new code, this section has been divided into two sections, section 101 relating to the subject matter for which a patent may be obtained, and section 102 which defines statutory novelty and states other conditions for patentability.” P.J. Federico, Commentary on the New Patent Act (emphasis added) (available at http://ipmall.info/hosted_resources/lipa/patents/federico-commentary.asp). Thus, as a principal architect of the act, Federico recognized that while Section 4886 had both “identified the subject matter for which a patent could be obtained,” and “recited conditions for patentability,” under the 1952 Act “section 101 relat[ed] to the subject matter for which a patent may be obtained” but “section 102 defines novelty and states other conditions for patentability [e.g., statutory bars to patentability].” Id. Further, Federico’s description is consistent with the reviser’s note to the 1952 act, which stated that the “existing statute is split into two sections, section 101 relating to the subject matter for which patents may be obtained, and section 102 defining statutory novelty and stating other conditions of patentability.”

About David

Professor of Law, Mercer University School of Law. Of Counsel, Taylor English Duma, LLP. Former judicial clerk to Chief Judge Rader; former lawyer with Baker Botts and other firms
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This looks familiar. Agree about CBMs. But I think the litigation defense aspect is more troublesome. Section 282 is not exhaustive. I think Aristocrat makes that clear. And so the question becomes whether eligibility is a recognized defense outside of 282. There’s some support for the notion that it is–see e.g. Robinson’s the Law of Patents (listing as defenses “Denial that the Patented Art or Instrument is within the Patentable Classes of Inventions” and “Denial that the Invention Covered by the Patent is Legally Patentable,” the latter of which is described as “a denial that the invention covered by the patent is patentable subject matter”). Understand that’s all pre-1952, but I think it supports the notion that eligibility can be asserted as a defense in litigation. Accepting your proposition would call into question utility, same-type and obviousness-type DP, and other possible defenses that aren’t enumerated in 282.

I don’t know who was writing Kyl’s material, but whoever it was, he said some things that showed he or the person ghostwriting his material did not fully understand patent law. At one point, he explained the need for the “otherwise” clause in the new 102 to limit the use of secret prior art being manufactured in places like China to invalidate US patents (the territorial limit on public use being relaxed.)

What he apparently did not understand was that secret use was not prior art to third parties. It can be a bar to one’s own patent application, but that is not what Kyl was talking about.

Then I believe he or others began to spout that the US started off as a first to invent system. Where he or those others ever got that idea I do not know, but it was widely used as a counter to the argument by some that we could not constitutionally adopt a first to invent system.

Kappos said other things like this as well. He said that we didn’t need 102(f) because we had 101!!!!!! He actually believed that a patent that issued to a person who did not invent the subject matter of the patent is invalid under 101. He and the solicitors officer said this in a filing in a case defending the constitutionality of the new act. Are you kidding me? If a company gets the inventorship wrong, the patent is invalid under 101? Really? If one company inventor learns of something from another company inventor and files on an improvement resulting patent is invalid under 101/103? Really? Are we going to have to reinstall the limitation to 102(f) in 103 we just removed because Kappos believed that 101 subsumes 102(f)? To me, there is no doubt that valid patents can and will be issued to named inventors who did not invent what they claimed to have invented, and there is nothing any defendant can do about that. No more interferences, etc. Over time, we are going to get very loosey goosey about inventorship as a result. Even pirate can get valid patents and the only people who can challenge the pirate are the people the pirate stole from — provided they file a patent application and start a derivation proceeding within a year. What a farce!

There is a lot of group-think among the movers and shakers and that group think is a mile wide and a millimeter deep.

There is no doubt that 101 is not a defense to infringement by the very terms of 282. I have long known this and have been pointing it out to others for two decades.

101 is not listed as a permissible grounds for revoking a patent claim in reexaminations, IPRs or CBMs. Yet it seems to be raised all the time. In a recent discussion of an appeal of an inter partes reexamination (the standing issue case), the underlying case had been mainly about 101 it appears. At the time I simply asked just how 101 got into this case as this was a reexamination. I got not one single reply to the question.

There is no doubt that 101 is not a defense to infringement by the very terms of 282. I have long known this and have been pointing it out to others for two decades.

How’s that working out for you?

Here’s what I know: if you get a patent on a method of thinking some useful, non-obvious thought (an entirely possible result given the swamp the PTO wades through every week) and come after me, you’re not going to win even if I admit that I’m thinking the non-obvious thought (and, heck, there will be lots of infringement going on throughout the court case).

Now, you and some pointy headed professor may care deeply about the precise reason given for your loss. But as long as you refuse to acknowledge that the problem I am facing is much, much more severe than the legal philosophical stick you have up your butts, then I’m not going to pay attention to you and hardly nobody else will either.

Do I need to explain why that is the case? Seriously, guys. We live in the real world. Most of us are trying to do the right thing, including the Supreme Court and Congress. Gorging yourself on heaping spoonfuls of ultraconservative Fed Society bullhockey without acknowledging the practical realities right under your nose is no way to go through life, much less run a country.

No one has ever confused me with having thing to do with the Fed. Society.

That’s rather surprising given your expressed fondness for Justice Scalia and your disdain for eligibility jurisprudence.

Regardless, you certainly have “something to do with it” now that you’ve apparently cultivated a strong relationship with The Patent Lover’s Most Trusted Lapdog (“anon”) over this issue. That character is into it up to his eyebrows.

Maybe before you two get too close, you should ask “anon” about his use of mailroom staff to screen registered letters addressed to attorneys and then discard the letters if they are deemed (by the mailroom staff) to refer to prior art relevant to a patent application prosecuted by the attorney. That’s a pretty typical example of “anon’s” deep analysis. I can give you many more, if you like.

if you get a patent on a method of thinking some useful, non-obvious thought (an entirely possible result given the swamp the PTO wades through every week) and come after me, you’re not going to win even if I admit that I’m thinking the non-obvious thought (and, heck, there will be lots of infringement going on throughout the court case).

Anything you care to disagree with here, David?

You do understand that if you remove 101 eligibility as a defense, such lawsuits would be encouraged. In addition, Prometheus would be back in business with claims indistinguishable from the one it lost and people would be sued for thinking “new thoughts” about data obtained using old methods.

That’s what you’re advocating for. That’s the practical reality.

I’m not sure why this is so difficult for you to admit or deny expressly, or why you can’t be bothered to suggest a solution to the problem. It would seem that you don’t believe that it’s a problem or that, for some reason, you consider this “principle” of yours to be a much bigger problem. But if that’s the case, you really should try harder to identify and criticise “judicial activism” elsewhere in the patent code (e.g., your beloved section 103 which the Federal Circuit completely ignores when pieces of paper with non-obvious text appears in a claim, or judicially created exceptions that give weight to claim “limitations” in certain fields that would be laughed out of court in any other context). At least try to be consistent.

1. What do you make of Congress saying in the AIA CBM provision that: “Nothing in this section shall be construed as amending or interpreting categories of patent-eligible subject matter set forth under section 101 of title 35, United States Code.” Why would they say that if they didn’t think 101 was part of CBM? The issue here is very similar to the § 273 issue in Bilski.

2. CBM can’t be motivated just by prior art, as you strongly suggest, because 112 is plainly part of CBM. And it is part of CBM, even while other provisions do not include 112, like reexam and IPR. If the focus was just on prior art, then 112 would not be included. In fact, there would be little reason for PGR and CBM, because IPR would largely suffice (putting aside non-reference 102/103 rejections, like anticipating sales and products).

3. Because everyone except you seems to interpret 101 as a defense to infringement, at least since the defense started growing in popularity in the mid-90s, why wouldn’t SCOTUS just defer to Congress, and say that if Congress wants to change the law, it can make itself more clear?

4. Doesn’t your argument defy common sense? I mean, if 101 is an extremely broad setup, and then 102 and 103 are narrow filters from that setup, does it make sense, as a policy point (or common sense point) to say that failing to fit within the extremely broad set is not also a defense to infringement? Clearly, Congress’ intent was “these kinds of things are supposed to be patents, and things that do not fall within these very broad terms are not supposed to be patents?”

5. Couldn’t SCOTUS weasel out of this issue by saying that 101 is not a statutory defense, but a common law judicially created defense, just like obviousness type double patenting – a defense well within the spirit of what Congress intended and that merely fills in obvious gaps in the statutory text?

1. See my note below about 18(e).
2. Need to think about it, but that would also turn on examiners expertise; spotting “abstract ideas” does not.
3. The supreme court has, once, applied 101 as an invalidity defense — last year. Every other case was not a validity case, it was a patentability appeal. I don’t know whether 101 matters in that context; I know 282 specifies certain things are defenses to infringement. Not everything is.
4. Last I checked, presentment and enactment mattered, not what a court thinks makes sense, or not. I personally think this makes no sense.
5. They can do whatever they want. But if they say they can make a judge-made defense when congress has directly spoken to the issue and limited them, they’re going to have to ignore a huge amount of their own cases.

Statutes are different folks. Read my book or pretty much any other statutory interpretation case of late — text, text, text.

1. If “abstract ideas” don’t turn on examiner expertise, then why does the USPTO create extensive training manuals to train them to reject claims using Bilski and the abstract-idea-exception?

2. You keep saying that the statute limits scotus. But anyone who’s read Benson, Flook, Diehr, Bilski, Mayo, and Myriad knows that, in the 101 context, the SCOTUS doesn’t give a flying f*** about strictly following 101. So what you’re telling us, and what SCOTUS is telling us, are directly opposite. I like your argument, I’m just not sure it’s going to go anywhere outside of academia.

1. So they needed prior art to spot abstract ideas?
2. I think you’re being unfair to the Court. No one has ever presented this to them. I believe they respect statutes — my own belief are fueled heavily by Scalia’s writings. The Court has *never* held that 101 is an invalidity defense. Period.

The Examiner training is needed to spot cases where ineligible subject matter (e.g., allegedly “non-obvious” thoughts) are being protected by claims that recite, in addition to the “non-obvious” thought, only conventional prior art steps. Such claims remove the allegedly “non-obvious” thoughts from the public domain, at least with respect to people who are lawfully practicing the prior art.

Basic stuff, David. Basic stuff that was completely ignored by your beloved 1952 Congress. Basic stuff that completely flew over the head of the absurd Judge Rich and basic stuff that is consistently ignored by those self-interested folks who think that our steroidal patent system isn’t lining their pockets thickly enough.

Why Malcolm, that sounds like an admission (against interests) that you know what the 1952 Law by Congress really did, and you know that Judge Rich correctly understood what that law did – and that the law IS something that you so desperately want to be something else.

My, if you had a shred of intellectual honesty in you, you would not dissemble so much on this little tidbit that you know.

I do know that he didn’t understand that a claim in the form [oldstep]+[newthought] effectively protects the new thought, at least with respect to lawful practitioners of the [oldstep]. And that’s just sad.

Then again, you don’t understand that either, do you? Maybe ask Jason Rantanen to explain it you. He seemed to get it without any difficulty, like most people who take two seconds to think about the issue.

Does David Hricik get it? Probably. Of course he admits as much you’ll bit his hand and leave a stain on his pants.

David: to 3: I don’t the SCOTUS will care about 282 or any other statute. They have their made up common law on invalidity and have been applying as if it was a statute.

From what I’ve read from the SCOTUS, what they are doing is pretending as if the 1952 Patent Act was an attempt to codify their common law. So, that what they do is interpret the statute as if it was imperfectly written if it does not comply with their common law.

Statutes are different folks. Read my book or pretty much any other statutory interpretation case of late — text, text, text.
I don’t understand how legally-trained people don’t “get” this. The statute reigns supreme.

One more point: the problem here isn’t interpreting 101 as a defense. The problem here is the judicially created exceptions to 101.

If the courts actually followed the text of 101, it would make no difference if 101 was a defense or not, because virtually every conceivable patent of economic value covers a machine or process or manufacture, etc.

So the problem is not really using 101 as a defense. If SCOTUS actually followed 101, instead of creating exceptions, then 101 would never even arise as a defense, because virtually every single patent falls within 101’s literal terms. The only reason we are having this entire discussion is that SCOTUS has created, and Congress has failed to undo, at least three gaping holes to 101, including the “abstract idea” exception which literally threatens to eviscerate patent law – because patents cover ideas in some sense, and all ideas are abstract.

That’s why CLS Bank is so important – much more important than the indefiniteness and attorneys fees cases, etc. CLS Bank has the potential to do serious damage to the software industry and the U.S. economy.

But, as a practical matter, accepting your argument would make a laughing stock of most every Supreme Court eligibility case. The Court would basically be saying, “well, we directly invalidated 5 or so very important patents, and indirectly invalidated countless others, and created decades of huge uncertainty and collateral litigation, and that was all wrong, but we just didn’t have the right argument, explicitly in front of us, and now that someone has slammed it in our face, we realize we were wrong this entire time.” I think it will be very hard for the Court to ever admit something like this.

I think you are out of your mind if you think the SCOTUS is going to do anything with CLS Bank but double down on their common law.

The holding is likely going to be that the claims are abstract and reciting the claims being performed by a computer do not change them being abstract. Boom. They are going to completely ignore everything but their own common law. They will give lip service to the 1952 Patent Act, but dismiss it.

NWPA: I completely disagree. CLS Bank is perfectly set up to do after Bilski and Mayo, what Diehr did after Benson and Flook. At worst, I think we’ll see another Bilski that is very narrowly tailored without upsetting settled expectations (remember – and it’s easy to forget – that Bilski, like Festo, was a pro-patentee decision that expanded patent eligible subject matter from the rigid rule that the CAFC had created).

If SCOTUS doubles down, it will be saying, without a full 102 and 103 analysis, you can reject a long claim to a detailed computing system about processing financial transactions based on a judicially created exception to section 101 of the Patent Act. A lot of Justices on the Court don’t feel comfortable with that level of judicial activism. Even Bilski expresses great caution about judicial activism.

Citing Stevens in Bilski is completely off the mark because: (A) Stevens is no longer on the Court, (B) it’s a dissent (they lost!), and (C) they lost because Scalia couldn’t stomach such a sweeping exercise of judicial activism against the statutory text. If Scalia couldn’t stomach a per-se rule against business method claims, how do you think he’s going to feel about long, detailed claims directed to computing systems?

Just take a look at the oral arguments the other day in Octane Fitness: Chief Roberts asks why they shouldn’t defer to the CAFC. Roberts is one of the more pro-patent Justices, and what that comment signals is that he’s growing tired and skeptical of constantly reversing a specialized appeals court designed to unify patent law. In the context of CLS Bank, that would mean following the traditional law and the Chief Judge of the CAFC, not the plurality of newer judges who slavishly follow incoherent SCOTUS precedent.

To your “CLS Bank is perfectly set up to do after Bilski and Mayo, what Diehr did after Benson and Flook”

One can hope that the Court develops such a backbone.

But let’s not forget too that certain members of the Court do seem to respect Judge Rader – and perhaps the proper stinginess of using a judicial exception (and the proper recognition of such things as machines (note that this does not require specific machines and manufactures (of which software is surely a manufacture) will prominently be acknowledged.

Otherwise, some pretty explicit words of Congress will be rendered nigh meaningless.

Kip: Of course I know that Stevens is no longer there. You have made some good comments. The reason to read the Stevens dissent is that three of the current justices signed on to it. And, Stevens replacement is as anti-patent as Stevens.

Scalia is the key as it appears that Kennedy, Roberts, Alito, and Thomas are pro patent. In fact, if Scalia would have signed on to the whole opinion in Bilski none of this would be happening.

Gingsburg, Sotomayer, Kagan, and Bryer are anit-patent.

Actually, Newman’s recent opinion regarding 112 and no structure needing an expert is dead on what you are talking about.

Your take on Roberts and Scalia is good in that they may not like to call something that is so tied to technology abstract. And, if they can get Scalia, then that would be our only hope for a reversal.

Still Bilski was not a win for patents because it upheld the use of a judicial exception created under common law based on a public policy that is no longer valid.

Your take is interesting. I haven’t made my final prediction yet, and I want to think about whether or not Scalia might be offended by Lourie. Lourie certainly is a vile offensive person.

Still, it is hard to imagine the SCOTUS reversing and saying you have to use the mechanisms of the 1952 Patent Act.

I concur completely with your comment of regarding the reason to pay attention to the Stevens dissent dressed as a “concurrence” and the fact that current justices signed on to it.”

That those Justices would so readily re write explicit words of Congress is downright scary.

It really is a sign of NIMBYism that such a move would be applauded. One can easily turn the tables and provide a hypothetical against the belief system of those that agree with this action to see how quickly that the very same type of action would be vociferously deplored.

But let’s take a tea leaf look at the remaining Justices:

Breyer: as anti-patent (and my philosophy above all else) as they come. His twisting of “using the precedent most on point and not changing that precedent – and at the same time – not actually using and understanding that precedent makes a mockery of the highest court. Anyone understanding law – and patent law – can easily see this through all of the dust-kicking.

Ginsburg: Shameful that she allowed hew personal views to overcome a clear separation of powers issue. She is smart enough to see this and yet, went along for the ride. An appeal to the larger issue at stake here (separation of powers) may bring her back to the side of reason.

Sotomayer: I put her as a definite change from Bilski. Keep in mind that the Bilski case was her VERY FIRST interaction on the bench, as well as the fact that Stevens was her mentor. Would you really stray far from your mentor in a first decision on the highest court of the land? With more experience under her belt, and her mentor no longer on the scene, this is one vote that I can easily swing heavily to upholding the law of the 1952 Act in stark contrast to her vote in Bilski.

Kagan: a relative unknown – remember, she was not a part of the Bilski decision.

If the arguments in the CLS Bank case focus only on innovation or money as function of innovation, Ginsburg will not likely be budged from her philosophical perch.

However, throw out an argument – even a token one – showing how the separation of powers is threatened (and how future separation of powers issue may threaten those things she cares about – that is, reveal the downside of NIMBY) and she may be convinced to switch and uphold the law as written by Congress.

CLS Bank has the potential to do serious damage to the software industry and the U.S. economy.

If you think that the US economy hinges in any meaningful way on software patentability, you need to step outside of whatever bubble you’re living in.

Any effect on the US economy will be brief and shallow. We heard the same hand-wringing over KSR and Prometheus. It really doesn’t that make much difference. Why is that? Because as important as some patent protection is to some people some of the time, patents aren’t the sole drivers of innovation and they aren’t the sole means by which companies stake out and protect their market shares.

CLS Banks is important but it’s not important for the reasons you think is. It’s important because it’s another assault on the cancer which is destroying the US patent system. There are going to be many more such assaults until the courts and the USPTO “get it.” They’ve been avoiding the issue for a long time. They can’t avoid it anymore.

I agree that a radical anti-software outcome in CLS Bank (which is a very unlikely possibility) would not cause Armageddon. But it would have very serious effects, to this extent:

1. some companies have giant patent portfolios
2. an anti-software decision has the potential to render most of the software patents invalid
3. all of the millions invested in those patents would be lost
4. investments in future patents could shrink dramatically
5. inventors would lose their jobs
6. licensing-based companies like IBM could easily go bankrupt
7. monetizing companies would suffer a huge blow and could go bankrupt

All of this could happen until Congress overturned the decision, in part or in whole, if it did so at all, which could take years.

A strong and correct outcome categorically disqualifying software patents would have effects, but not the ones you suggest.

1. Whether companies have giant portfolios is irrelevant to the fortunes of the industry.

2. Rendering software patents invalid is greatly desired by the industry and even more overwhelmingly desired by the computer programmers.

3. No money would be lost. All patent licensing revenue has to come from the pockets of one company in order to pay another. There can be no net profit from patent licensing. The benefit of patents for an industry is the innovation they might inspire, not the licensing revenue which is always a net loss once transaction fees are accounted for.

4. Obviously future patent applications would dry up when the Supreme Court recognized them as outside §101.

5. Computer researchers are in great demand. Very, very few will lose jobs and those will have no trouble at all finding better ones.

6. IBM makes a fraction of a percent of its revenue from patent licensing. After the costs of IP attorneys, it probably makes even less of its profit from licensing. And those patents that IBM has sold profitably to Google and the like in recent years have mostly been hardware patents, as have most of IBM’s valuable licensing deals.

7. There isn’t a single patent monetizing company in the software industry producing valuable inventions or providing a valuable and worthwhile service to the industry. We’d love to see them all go away forever.

When MM says, “if you think that the US economy hinges in any meaningful way on software patentability, you need to step outside of whatever bubble you’re living in,” he’s badly wrong. Ending software patents would be an immediate and palpable benefit to the industry and the national economy.

Most companies in the industry and the overwhelming majority of software writers are praying for relief in the form of a blanket disqualification of all software patents.

Owen’s “Most companies in the industry and the overwhelming majority of software writers are praying for relief in the form of a blanket disqualification of all software patents.” has one major – and fatal – flaw: such a blanket disqualification cannot have a legitimate legal basis under the law as written by Congress.

1. Because Owen says so.
2. Was not aware that if “most of” (which I doubt) an industry can opt out of a law, they can do so.
3. That zero-sum argument flunks Econ 101. When capital is transferred it is usually assumed to be for better productive uses.
4. Obviously. And obviously if we legalize murder, murder prosecutions would dry up.
5. Computer researchers may be in great demand, but that’s not what American computer researchers crying about offshoring to India say in the middle of their blubbering.
6. So if IBM or any other company makes only a fraction of their revenue from something, it is OK to take that something away? Vladimir Putin wants you you call him.
7. Depends on how narrowly you want to define “value”. If you mean “teach them to respect property rights” and “extract value from past investments in infringed technology” you plainly are wrong.

Basically I agree with you Kip. Few people understand or care to understand that the patent system affects companies behavior so profoundly. People seem to think that companies just naturally want to spend money on R and D and invent their own products without just stealing other people’s products. Without patents we will simply go to the lowest common denominator which will be you take the product and reproduce it in China. No one is going to want to invest when it is going to be copied in a week and sold for half the price.

I will open the invitation (currently open to Malcolm and 6) to anyone who does not think software is eligible for patent protection to put your money (and lifestyle) behind your beliefs and forego all benefits of the innovations you seek to deny protection to.

The Amish would welcome you. Our loss is their, um, gain. and while you may miss the opportunity to express your views using the very tools you wish to take for granted, your comments here (and elsewhere), well, will be missed not so much.

Since software patents are strictly an impediment and never a benefit to innovation and production in software, there isn’t anything to give up. That’s why the industry you pretend to help doesn’t want and kind of software patents to exist.

The industry doesn’t want? That is not true. Many big software companies know that without patents they will be copied and put out of business. I have spoke directly to the vice presidents of IP of such companies .

101 is not a prior art driven doctrine. See Chakrabarty. See also Prometheus.

The analysis in Prometheus plainly involves determining the relationship of the claims to the prior art. Maybe you have a special definition for “prior art driven doctrine” that you want to share with everyone?

101 is not a prior art driven doctrine
I agree. However, that wasn’t Ned’s point. Ned’s point (for some reason, he seems to get it on this issue) is that the judicially-made exceptions to 101 of “Laws of nature and products of nature” are really based on a form of “prior art” argument (i.e., inventions already existing in nature).

Without a convenient place to put them, the courts decreed them exceptions to statutory subject matter under 101. However, they could have just as easily folded them into 102/103. The big issue is the “abstract idea’ exception. I agree that Benson was more a (poorly reasoned) 112 issue than a 101 issue. Again, however, the court had to put their “abstract idea” exception someplace so they chose 101.

Ned, I agree with you that the abstract ideas exception is primary doing work that 112 should be doing.

But I also agree with anon that it is too quick to say that natural phenomena are part of the prior art. Section 101 says “invents or discovers,” and 102 and 103 are based on what are known or obvious. Some courts, some of the time, have treated preexisting natural phenomena as prior art. But there are very strong arguments that they should not, until they are previously known or obvious. Rader makes a similar point about the statutory reference to “or discovers” in one of his opinions. Dyk seems to take the opposite view.

Kip, did you read Alice’s brief. I think it does make the excellent point that the basis for excluding laws of nature and products of nature in that they exist. But the same is not true of abstract ideas. All they require is enough “added” to transform the idea into a useful application.

A simple, but elegant approach; and easily includable within the statutory framework of 102/103/112.

On this “because it’s old it can’t be covered” idea, read why the definition of “process” was added to 100(b). It was DELIBERATELY to overrule uncertainty in in re thau (sp) which suggested that a new use of an old product was not a “process.” The court said if you find an new use for something old, go for it. So, if you say “a natural phenomenon is prior art and so old” you run smack dab into both the plain language of 100(b) and the overruling of Thau.

Based on a “prior art” view of natural phenomenon/blah blah, how is a new use of an old “thing” not eligible under 100(b)? have fun with that one.

When one understands that, and then reads Chakrabarty and pays attention to the the “though just discovered” line, one can understand that a warehouse of nature basis for the exception is timeless. The exception simply is not moored to a sense of prior art. This is why Myriad was decided as it was.

It is also important to understand this distinction for another reason. Just as the fact that machines do not think wrecks the mental steps doctrine, when one understands that 101 must be separated from a prior art basis, then one can see the futility in the effort to bar computer patents based on a notion of trying to deny the fact that a new machine is created (a new machine is created with the added manufacture and machine component software). This is a plain fact.

But for argument’s sake, let’s skip the point that Ned often skips about that fact that a machine must first be changed with the addition of the machine component, and jump to his argument of mere use. The point here that Prof. Hricik emphasizes clearly shows that even such use indicates patent eligibility. If the end result is still patent eligibility, then why the immense efforts to deny eligibility to software and the gamut of method patents?

This is just like Chakrabarty: stop trying to fight so hard on the pigeon-holing, realize that the d@mm thing is eligible and move on.

Of course, the idea of mere use does not survive closer scrutiny. See Nazomi. The idea of mere use would mean the item that you are merely using was previously – and without change – already inherently present, – again, without change having the ability to be used in the manner claimed.

To embrace that idea, one must embrace the fallacy of the “House” argument (the first computer necessarily contained all future inventions and improvements) and the Morse case actually refutes that fallacy.

The bottom line is that software is an invention. There simply is not intellectually honest way around this inescapable fact.

The proposed narrowing went like this: Thau was a messed up claim. It was sort of product-by-process, but essentially messed up. In the opinion, the board (court? I don’t have this in front of me), suggested that (a) you could not get a product claim covering something that had been disclosed in the prior art (duh) and (b) that there was something wrong with a process claim that claimed something “old” in the art. Federico and the legislative history talk about the case and they amended 100(b) to eliminate any question that a process that used something old was a process. (No discussion of patentability/validity/etc. Just to clear up dicta in a poorly reasoned case.)

So, if you want to say “you can’t patent gold because it’s old,” you’re right. If you want to say, “you can’t patent gold in a process to make tin,” you’re wrong. If you want to say, “you can’t process an old machine in a new method,” you’re wrong. End of story?

I suspect I know what it means – and Ned Heller won’t like it one little bit.

Let me set the context: Stevens was slated to write a majority opinion in a patent case largely viewed to be the bookend to his career on the bench. The depth and structure of his “concurrence” is startling. But, one not so small problem. For his main thesis in his “concurrence” to hold – that business methods as a category are not a part of the Useful Arts and not patent eligible subject matter, he would have to explicitly rewrite the words of Congress. He lost his majority position on this very point.

Now we know that a major overhaul in the wake of a Supreme Court decision can receive some pretty intense scrutiny. The majority in Bilski refused to hold that as a category business methods were eliminated as eligible subject matter. Congress – fully aware of this made a gesture for saving face by creating the CBM review section – but they did not want to disturb the holding that business methods as a category were patent eligible. Had they not included the section that explicitly said that they were leaving alone the existing meaning of patent eligibility for business methods as a category, they knew that a later court may take their action too far and claim that Congress was trying to eradicate business methods as a patent eligible item.

Section (e) cements in place the defeat of Stevens and the anti-business method jihad as decided in Bilski. By explicitly stating that subject eligibility is to be left at the pre-AIA, post-Bilski understanding, the fact that a post grant review aimed at business methods could not be used by a later Court to pull a reverse-Stevens. Section (e) is an insurance against judicial activism.

Another (consistent) interpretation is that Congress was simply too cowardly, and too scared, to meddle with the utter case of 101-eligibility jurisprudence. And it was worried that, by creating CBM, some people would interpret it as doing just that. So it made crystal clear that it was passing the buck right back to the Supreme Court.

To the extent this is right, it weakens arguments that the SCOTUS should defer to Congress (or the 1952 Congress) on this issue. Even though SCOTUS should.